I regularly save thousands of dollars on big ticket purchases because of lessons learned from a 10-week negotiation course.
In this post I’ll give you the basics so that you don’t have to sit through long classes like I did. I also learned a lot just from life experience, so you get that benefit as well.
Before we begin, you might ask yourself why you need to be good at negotiation. As a parent, you spend a lot of money. On cars, renos, houses, you name it. Also, as a parent, you make a lot of money. Your business, your job, your sales, all of that. You need to save as much money as possible when buying stuff and earn as much money as possible when selling stuff. Being skilled in negotiation biases the results in your favor.
So, in descending order:
#5: The problem is the enemy, not the other guy
Don’t fight the other person for superiority. That way leads to the dark side.
Instead, treat the problem as the enemy. Say you’re negotiating to sell your sofa. You can’t come to an agreement with the other guy. Rather than getting into an argument, consider aiming your target at the problem of agreeing on the price. It is a subtle difference, but the other side will notice. The reduction in antagonism gives rise to a spirit of cooperation, increasing the likelihood of a deal being made. It also puts the focus on solving the problem, where it belongs.
#4 Consider the other side’s interests
It is tempting to focus on your own interests, and not the other guy’s. This reduces what you can do in a negotiation.
Refrain from getting in the mind loop of “this is what I need”. The other guy needs things too. The solution to your negotiation is the overlap between your needs and the other side. Obviously you want it biased to your side, which is totally ok. But to ignore the other guy’s needs will just lead to everyone getting frustrated.
#3 Carefully verify the other side’s numbers
When my wife and I renovated our kitchen, the cabinetry company that we dealt with over-quoted us by $4,000. It was objectively clear that the price was wrong. They had literally screwed up their addition.
I don’t think that this was intentional, they probably just made a mistake. But it really puts the truth to the maxim “trust, but verify”. We saved $4k on our reno just by checking the numbers. It also allowed us to save even more money because the company’s reps were knocked off their game and we kind of nearly walked out over this, so it allowed us some more leverage.
#2 Find a competing offer
I recently negotiated the purchase of a new car, and traded in my old car. By the end of the negotiation, I was up $3,000 from the original offer, and got $1,200 in extra value in rims and paint upgrades. I had a similar situation from a previous car negotiation, where I saved $2,900.
The biggest tool during that negotiation was simply finding a competing offer. That way you can just bounce back and forth between two sellers (or buyers) and get your best price. The market will determine the price threshold, and you end up winning the best deal.
#1 Just showing up is most of the battle
The #1 negotiating tactic of all time can be summed up in two words: “show up”. Lots of people are shy about haggling. But it’s not hard, and in many situations it’s almost expected that you would negotiate. Generally, the bigger ticket the item is, the more likely the ability to negotiate. You’re not going to haggle over the price of a jug of milk, but a computer or a car, sure you would.
Even if you don’t get a better deal every single time, you’re going to win sometimes. Say you’re only batting .300 when asking people for negotiating a deal. You still end up richer in the long run. You miss 100% of the shots you don’t take, so try to bargain every time.
So next time you’re buying a TV, car, furniture, or house, show up with these negotiating tips. Hope this post puts you on the right side of the bargaining table.